According to Bloomberg, Asian equities are expected to follow the upward trend of US stocks on Thursday, driven by positive signals from Wall Street. Australia and New Zealand yields declined early Thursday, mirroring a rally in US Treasuries. The US 10-year yield dropped 11 basis points to 4.03%, a level not seen since February, which also contributed to a rally in the yen. The Japanese currency remained steady in early Thursday trading.
In Asia, key economic data scheduled for release on Thursday includes Australian trade figures, Indonesian inflation data, and the China July Caixin manufacturing PMI. In the commodities market, West Texas Intermediate crude oil rose early Thursday, adding to its 4.3% gain on Wednesday, marking the largest daily increase in over two years. Gold prices remained stable after climbing on Wednesday.
Changes in the Federal Reserve's statement have highlighted a shift in tone among several policymakers, including Chairman Jerome Powell, who acknowledged growing risks to the labor market. This shift is likely to reinforce expectations among economists and investors for a rate cut at the central bank’s meeting on September 17-18. Despite markets already pricing in a September rate cut, neither the Fed’s statement nor Powell’s remarks significantly altered the anticipated rate path.
Interest-rate swaps indicate that traders are still fully expecting a quarter-point cut in September, with a total of nearly 70 basis points worth of reductions for the year. David Russell of TradeStation noted that upcoming jobs data on Friday and the Consumer Price Index (CPI) in two weeks are crucial. Positive outcomes from these data points could lead to clearer messaging from Powell at the Jackson Hole symposium in late August.